Cleft palate is the most common congenital craniofacial anomaly and occurs as an isolated defect as well as a component of syndromic and sequential disorders. Despite recent medical advancements, infants born with cleft palate often suffer multiple handicaps that significantly compromise the quality of their lives. TGF? plays a pivotal role in regulating the fate of the medial edge epithelium during palatal fusion. We have generated an animal model with conditional TGF? type II receptor (Tgfbrfl/fl Wnt1-Cre) gene ablation in neural crest cells. These Tgfbr2fl/fl Wnt1-Cre mice demonstrate cleft palate and other craniofacial defects with 100% phenotype penetrance. There is normal CMC migration into the first branchial arch of Tgfbr2fl/f;Wnt1-Cre embryos, indicating that disruption of the TGF? signaling does not adversely affect the migratory phase of CMC. Therefore, TGF?-mediated gene expression is specifically required locally during palatal development. Recent studies have shown that TGF? signaling can negatively regulate the expression of Msx1 in cultured palatal mesenchyme (Nugent and Greene, 1998). Our initial analysis of the Msx1 promoter reveals multiple Smad binding sites with functional significance in mediating Msx1 expression in response to TGF? signaling. Using the Wnt1-Cre/R26R model, our preliminary data shows that there is a deficiency of CNC-derived palatal mesenchyme in Msx1 null mutant mouse embryos. The deficiency of CNC results from an elevated expression of CDK inhibitor p1$NMa and the disruption of cell proliferation. Taken together, we design studies to test the hypothesis that TGF? signaling regulates the expression of homeobox gene Msx1, which in turn controls the progression of cell cycle to regulate the fate of CNC-derived palatal mesenchymal cells during palatogenesis. In Specific Aim I, we propose to determine the effect of TGF? and Msx1 signaling on the fate of the cranial neural crest during palatogenesis by analyzing mouse embryos with Tgfbr2fl/f;Wnt1-Cre or Msx1 mutation. In Specific Aim II, we will attempt to identify and characterize the molecular mechanism by which TGF? signaling regulates the expression of Msx1. To determine the functional role of Msx1 in regulating the expression of cell cycle regulator p19INK4d to control proliferation and differentiation processes of CNC cells during palatogenesis.